3 ms·

I increasingly think that for social safety nets to work well, they need to be universalized, if possible. Otherwise we get welfare traps, ghettoisation or jus

I increasingly think that for social safety nets to work well, they need to be universalized, if possible. Otherwise we get welfare traps, ghettoisation or just poor quality (like buses in places where only the poor use em). It doesn't mean everyone has to use it, just that they can. This is common sense in services like health or education, where we're used to it.

xcklo 7y ago
That universalism leads to less social stratification is essentially the idea behind the social democratic welfare state. https://en.wikipedia.org/wiki/Welfare_state#Three_worlds_of_the_welfare_state https://en.wikipedia.org/wiki/Welfare_state#Three_worlds_of_...
smallnamespace 7y ago
We already have a good solution to avoid ghettoisation or traps called progressive taxation. However, it doesn't go far enough because the tax rate doesn't take benefits into account, so even though you're getting >$0.80 of every dollar earned, after adjusting for benefits it may instead be $0.20 or even negative. The Earned Income Tax Credit (EITC) is an especially large contributor to this situation [1]. To avoid a trap, marginal income after taxes and benefits should start high and fall monotonically. It should probably also be concave up (the amount of income to bump you into the next 'adjusted tax' bracket gets bigger and bigger). [1] https://www.urban.org/sites/default/files/alfresco/publication-pdfs/412722-How-Marginal-Tax-Rates-Affect-Families-at-Various-Levels-of-Poverty.PDF https://www.urban.org/sites/default/files/alfresco/publicati... (page 767, Figure 2)
- freewilly1040 7y ago
  The issue of capital gains getting preferential tax treatment over wage labor is a much bigger problem than any lack of benefits taxes.
  - xchaotic 7y ago
    Why? It's just artificial money, what's the concrete negative impact? (I probably agree, I just think it needs to be concrete and justified)

xcklo 7y ago

That universalism leads to less social stratification is essentially the idea behind the social democratic welfare state. https://en.wikipedia.org/wiki/Welfare_state#Three_worlds_of_the_welfare_state https://en.wikipedia.org/wiki/Welfare_state#Three_worlds_of_...

smallnamespace 7y ago

We already have a good solution to avoid ghettoisation or traps called progressive taxation. However, it doesn't go far enough because the tax rate doesn't take benefits into account, so even though you're getting >$0.80 of every dollar earned, after adjusting for benefits it may instead be $0.20 or even negative. The Earned Income Tax Credit (EITC) is an especially large contributor to this situation [1]. To avoid a trap, marginal income after taxes and benefits should start high and fall monotonically. It should probably also be concave up (the amount of income to bump you into the next 'adjusted tax' bracket gets bigger and bigger). [1] https://www.urban.org/sites/default/files/alfresco/publication-pdfs/412722-How-Marginal-Tax-Rates-Affect-Families-at-Various-Levels-of-Poverty.PDF https://www.urban.org/sites/default/files/alfresco/publicati... (page 767, Figure 2)

freewilly1040 7y ago
The issue of capital gains getting preferential tax treatment over wage labor is a much bigger problem than any lack of benefits taxes.
- xchaotic 7y ago
  Why? It's just artificial money, what's the concrete negative impact? (I probably agree, I just think it needs to be concrete and justified)